Crested Butte’s finances are really healthy, so…

A financial audit is like taking a physical. Actually, the process is probably like getting a tooth pulled without gas. But in the end the audit is meant to take the temperature of a client’s financial status. The town of Crested Butte is healthy. Healthy like Thor. And that is a good thing.
The auditors were in town for three days in March, going through the books and matching up numbers. That would be the tooth extraction. The final report was in the council packet Monday. That would be the doctor’s report.
There was no council discussion about the 50-page analysis but I assume most of the councilpeople read it. The report makes clear that one intention of the document is “for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements.” In my opinion, it can’t get much better.
Not every community gets an A+ in these matters but Crested Butte stands at the top of the honor role. The primary reason, and she’ll hate me for pointing it out, is Crested Butte finance director Lois Rozman. She takes a consistently conservative financial view and I think she sees her job in part as growing the fund balances, the financial reserves, of Crested Butte. She does a good job.
While some communities spent money like a sailor on leave during the economic boom of the early 2000s, Rozman made sure the staff and the councils remained on board the ship and didn’t go to the bar. That paid off in the recessionary late 2000s, when some communities had to lay off personnel and decide whether it was better to turn off the streetlights or not mow the parks because they didn’t have the money to do both. Crested Butte weathered that storm.
According to the quick and easy numbers from the audit, and Lois will shake her head at me for being so simple with the numbers, the town’s assets exceed its liabilities and the town is in the black by about $36,551,401, an increase of $1.6 million from the prior year.
In 2013, $241,000 was added to the Crested Butte general fund reserve. That general fund reserve totaled $3,888,666 by the end of December. It has only grown in the last five months. That is money that is not dedicated to specific town purposes. It “is available for appropriation at the Town’s discretion.” That figure, according to the audit, is approximately 117 percent of the total 2013 expenditures from the combined general fund. That is huge.
Most communities seem to have a comfort level if they have between 35 percent and 50 percent of annual expenditures in reserves. The entire CB staff sacrificed to build  up these big reserves so she and others in the Town Hall deserve a raise. They protected the town in hard times and it remains on solid financial footing.
    
In 2013, sales tax revenues increased by 6.5 percent. The auditors predict that sales tax revenue in 2014 will increase “slightly” from 2013. As of April, the town sales tax revenue was already up 8.5 percent for the year and summer is knocking at the door with all signs pointing to a flood as opposed to a trickle. Sales tax revenue will increase more than “slightly.”
The town’s policy is to be financially conservative and that is prudent. The 2014 budget anticipates using $156,000 out of reserves for things like grants to the community, park planning and computer upgrades. So even in a tight conservative budget during improved fiscal times, there is the need to dip into reserves. That is why there is the current discussion over how to consistently pay for park maintenance. It’s a smart discussion to have.
Crested Butte is a resort community financed in large part through sales tax. Sales tax revenue can fluctuate. The town’s general capital fund is financed mainly through Real Estate Transfer Tax and that can fluctuate even more.
The bottom line is that under the direction of Rozman, the staff and recent councils have been very good about saving money. The 2014 budget is another conservative document anticipating sales tax revenues to essentially be flat. The reality is that sales tax revenue is booming and will be off the hook this summer. So when the staff and council begin their budget deliberations in a few months the question for them is how much more do they need in the bank. I suggest not that much more.
Budgeting to replace or take care of some things on the deferred maintenance list would not be like a wild and crazy night on the town. Saving it for lawyers in a far-off Red Lady fight is just bad karma. If that’s a priority of any council, start a new “war” budget line item and begin saving for that.
But setting a goal to maintain reserves at say 75 percent to 100 percent of annual expenditures still puts the town at the top of the honor roll with an A+ but could help release some growing pressure that appears to be building each steamy budget cycle. Maybe it’s infrastructure for Block 79 and more affordable housing in town. Maybe it’s the tennis court or skatepark repairs. It is sometimes wise to spend money repairing assets rather than waiting for them to crumble and then have to start over. Perhaps it’s just more holiday decorations or more reliable vehicles. The reserves can’t be counted on to maintain town assets but they could be used to take some pressure off a dire five-year capital budget.
So kudos to Lois and her staff. She needs to continue to argue for the fiscally conservative path because, Lord knows, most politicians would spend it all if they could. But setting a prudent path to address some needed or even desired projects is not a bad deal, given an audit that confirms the town’s finances have the health of Thor.